Staying up to date with the constantly changing landscape of Medicare, Medicaid, and private insurance regulations can be a daunting task. On top of that, navigating the complex world of medical billing can add an extra layer of confusion and frustration.
With so many terms and processes to understand, it’s easy to feel overwhelmed.
In this article, we will break down one key component of medical billing: charge capture. From defining what it is to explaining its importance for accurate reimbursement, we will provide you with a comprehensive guide on charge capture 101.
So read on to better understand this vital aspect of medical billing and gain a better understanding of how it impacts your revenue cycle management.
What Is Charge Capture?
Charge capture is the process healthcare providers use to get paid for the services they offer to patients. Say a patient walks into your hospital or clinic.
They consult with a doctor for 15 minutes. After that, the doctor orders a blood test and an imaging scan. The doctor then looks at the test results, reaches a diagnosis, and administers the appropriate treatment.
Every service the patient receives, from the initial consultation to lab and imaging tests, test result analysis, diagnosis, and treatment, must be recorded and billed. Those charges are then presented to the patient or the patient’s insurance provider for payment. That’s what charge capture is all about.
Charge capture involves documenting and billing medical services offered to patients. It plays a crucial role in ensuring healthcare providers get paid for their services. And more so, get paid the correct amount for accurate revenue collection and compliance.
In other words, charge capture is key to a healthcare provider’s revenue cycle performance. Without proper charge capture, you risk undercharging patients or having your reimbursement claims denied, leading to revenue leakage and missed income opportunities.
Generally, healthcare organizations lose about 1% of their potential annual revenue to charge capture errors. A mere 1% might not sound like much, but it could translate to millions in lost revenue every year. The average net patient revenue in US hospitals in 2021 was $207.6 million—1% of that is over $2 million.
Importance of Charge Capture
Charge capture essentially secures revenue. Inaccurate or incomplete charge capture could mean missing out on revenue from patient visits. For hospitals and clinics operating within tight margins, accurate charge capture could make all the difference between healthy revenue cycle management and financial turmoil.
Without an efficient charge capture process, you’ll struggle to keep your facility running, let alone fund development projects such as equipment upgrades or expansions.
Additionally, charge capture streamlines revenue cycle management by minimizing payment delays. Payors, especially commercial insurance companies, will often scrutinize medical billing charges from all angles. This scrutiny usually follows lengthy backtracking, causing payment delays and sometimes claim denials.
Well-detailed and accurate charge capture avoids this problem or at least mitigates it. You can easily prove or amend disputed charges and get reimbursed faster. Similarly, proper charge capture safeguards your organization from audits, fines, and other legal action arising from billing errors.
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The Charge Capture Process
On paper, charge capture seems pretty straightforward. You record information about patient interactions and bill the services rendered. But in reality, it’s a far more complex process involving inter-departmental collaboration, professional accountability, rules, and regulations.
The end-to-end charge capture process follows these six steps:
Step 1: Provision of Medical Services
Charge capture begins with a medical provider interacting with the patient. During this interaction, the healthcare professional provides medical services such as consultation, diagnosis, medication, and clinical tests. The patient may also receive or use medical supplies such as bandages, hypodermic needles, crutches, oxygen, etc.
Step 2: Notation
The second step of charge capture is where things start to get complicated. The healthcare professional must document all the services and supplies provided to the patient. The notes must be detailed, showing when and how the medical services were rendered.
Notation is commonly done manually using pen and paper—a rather archaic method highly susceptible to errors and omissions. A better way of noting is by using a digital revenue cycle management system that integrates with electronic health record (EHR) workflows.
Step 3: Coding
Patient notes are assigned ICD-10, CPT, or HCPCS billing codes. Coding simply means translating medical services and procedures into a universally recognizable language. But it’s not that easy in practice.
The CPT coding system, for example, has over 11,000 unique codes, each corresponding to a billable medical procedure or service. And given that there might be dozens or hundreds of services offered to each patient, manual coding would be painstakingly tedious and time-consuming. That’s why healthcare providers go for digital coders, such as Codify.
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Step 4: Charge Entry
Once correctly coded, the billing office charges the entries marked on each patient’s account. The entries are checked against the organization’s chargemaster, which dictates the fees for various medical services and procedures.
At this stage, the final patient bill starts to come together as it’s populated with charge entries. Medical billing software is handy for entering, organizing, and numerating charges.
Step 5: Review and Approval
Think of this step as the quality check stage.
Every charge entry is reviewed to ensure it’s coded and billed correctly. In case of any inconsistencies, those responsible for generating the entry must review the discrepancies. And if everything checks out, the charge entry is approved.
In most organizations, charge capture reviews are done as each new charge enters the billing system. All charge entries are then double-checked when composing the final bill.
Step 6: Claim Submission
Finally, all approved charges are submitted to the payor, either the insurance company or the patient. Claim submissions include detailed descriptions of patient interactions along with supporting proof and fee values.
If the payor contests the claim, it is reviewed, corrected (if necessary), and resubmitted. Once all billing doubts or issues are settled, the payor honors the claim. But of course, the best outcome would be immediate payment of all claims in full and without encountering any disputes.
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Common Challenges in Charge Capture
Charge capture involves meticulous record-keeping and lots of moving parts. Naturally, charge capture is fraught with challenges.
Erroneous Charges
Sometimes, healthcare professionals capture erroneous charges and end up billing patients for services they never received. This typically stems from poor documentation of patient interactions. Entering and billing the wrong charges can lead to revenue loss or compliance risks. In some cases, incorrect billing information can endanger the patient’s health.
Missed Charges
It’s not always possible to capture every medical charge. In the ER, for example, it can be difficult to track and document every frantic emergency procedure performed on each and every patient. You’ll inevitably miss a few charges here and there.
The problem, however, comes when the organization misses too many charges. Even minor omissions can really add up. Then, your revenue flow starts taking a hit.
Coding Errors
A coding error occurs when someone assigns a charge entry to the wrong billing code. It’s often a clerical error, perhaps a typo, transcription mistake, or omission.
Coding errors are pretty serious and can be hard to trace. For one, they jeopardize compliance with medical billing and care standards. Second, insurance providers may deny reimbursement on account of a single coding error. And in the worst-case scenario, the payor could take more drastic legal action.
Charge Lag
Charge lag is the period between rendering a medical service and billing it as a charge entry. The longer it takes to bill a patient, the longer you wait to get paid. Timely reimbursement is essential to maintaining a healthy revenue cycle.
Charge lag can occur due to several reasons, including:
- Poor coordination and communication between medical professionals and the billing department
- Needlessly slow or complicated charge capture processes
- Assigning charge capture responsibilities to unskilled employees
Regulatory and Policy Changes
Healthcare quality standards and regulations keep evolving. Medical billing codes, for example, are updated nearly every year. When such changes occur, they must reflect in charge capture as well.
Also, health insurance providers and other third parties can randomly change their policies and processes around claims and reimbursement.
Healthcare providers are expected to keep up with such changes as soon as they happen. This could mean constantly updating the chargemaster, retraining billing staff, and rethinking the charge capture process.
Claim Denial
Reimbursement claims sometimes get denied. Crowe benchmarks show that in Q1 2023, commercial payors initially denied 15.1% of inpatient and outpatient claims. In the same period, Medicare denied 3.9% of claims.
The report further points out that although all initially denied claims were eventually paid out, the administrative efforts to turn these reimbursements around were very costly.
A claim can be denied for any number of reasons. In most cases, the payor requests additional information/documentation, cites clerical errors, or contests the validity of certain charge entries.
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Tips and Best Practices for Using Charge Capture
When done properly, charge capture helps your organization realize its full earning potential. It also helps maintain compliance with all the stringent and dynamic rules, policies, and regulations. Ultimately, efficient charge capture leads to growth and overall better quality of care.
While there’s no one-size-fits-all when it comes to charge capture solutions, here are some best practices to ensure you get it right:
- Train both medical and non-medical staff on the charge capture process. Also, educate everyone on the importance of efficient and accurate charge capture.
- Develop a proper documentation system. Print out well-structured forms to collect patient notes. Or better yet, adopt a robust EHR solution.
- Conduct regular charge capture audits to identify holes or bottlenecks in the process. Third-party auditors such as AAPC and Ni2 Health will even help you optimize your charge capture process.
- Ramp up charge capture reviews and approval. Ensure every claim is thoroughly checked before it is submitted for reimbursement.
- Go digital. Streamline revenue cycle management by leveraging a charge capture platform such as Updox.
